Ukraine (12/04)

GeographyArea: 233,000 sq. mi.Cities: Capital--Kiev (often transliterated as Kyiv from Ukrainian, pop. 2.8 million). Other cities--Kharkiv, Dnipropetrovsk, Donetsk, Odesa, Lviv. Terrain: A vast plain mostly bounded by the Carpathian mountains in the southwest and by the Black Sea and the Sea of Azov in the South. Climate: Continental temperate, except in southern Crimea, which has a sub-tropical climate.

PEOPLEThe population of Ukraine is about 47.42 million. Ethnic Ukrainians make up about 73% of the total; ethnic Russians number about 22%, ethnic Belarusians number about 5%. The industrial regions in the east and southeast are the most heavily populated, and the urban population makes up about 67% of the population. Ukrainian and Russian are the principal languages. Although Russian is very widely spoken, in the 1989 census (the latest official figures) 88% of the population identified Ukrainian as their native language. The dominant religions are the Ukrainian Orthodox Church and the Ukrainian Greek Catholic Church (which practices Orthodox rites but recognizes the Pope as head of the Church). The Ukrainian Orthodox Church is divided between a Moscow Patriarchy and a separate Kiev Patriarchy, which was established after Ukrainian independence and which declared independence from Moscow. In addition to these, there are also the Ukrainian Autocephalous Orthodox Church and representatives of the Russian Orthodox Church Abroad.

The birth rate of Ukraine is declining. About 70% of adult Ukrainians have a secondary or higher education. Ukraine has about 150 colleges and universities, of which the most important are at Kiev, Lviv, and Kharkiv. There are about 70,000 scholars in 80 research institutes.

HISTORYThe first identifiable groups to populate what is now Ukraine were Cimmerians, Scythians, Sarmatians, and Goths, among other nomadic peoples who arrived throughout the first millennium B.C. These peoples were well known to colonists and traders in the ancient world, including Greeks and Romans, who established trading outposts that eventually became city-states. Slavic tribes occupied central and eastern Ukraine in the sixth century A.D. and played an important role in the establishment of Kiev. Situated on lucrative trade routes, Kiev quickly prospered as the center of the powerful state of Kievan Rus. In the 11th century, Kievan Rus was, geographically, the largest state in Europe. Christian missionaries, Cyril and Methodius, propagated the Christian faith and the Cyrillic alphabet. Kievan Rus Prince Volodymyr converted the Kievan nobility and most of the population to Christianity in 988. Conflict among the feudal lords led to decline in the 12th century. Mongol raiders razed Kiev in the 13th century.

Most of the territory of what is modern Ukraine was annexed by Poland and Lithuania in the 14th century, but during that time, Ukrainians began to conceive of themselves as a distinct people, a feeling that survived subsequent partitioning by greater powers over the next centuries. Ukrainian peasants who fled the Polish effort to force them into servitude came to be known as Cossacks and earned a reputation for their fierce martial spirit and love of freedom. In 1667, Ukraine was partitioned between Poland and Russia. In 1793, when Poland was partitioned, much of modern-day Ukraine was integrated into the Russian Empire.

The 19th century found the region largely agricultural, with a few cities and centers of trade and learning. The region was under the control of the Austro-Hungarian Empire in the extreme west and the Russian Empire elsewhere. Ukrainian writers and intellectuals were inspired by the nationalistic spirit stirring other European peoples existing under other imperial governments and were determined to revive Ukrainian linguistic and cultural traditions and reestablish a Ukrainian state. Taras Shevchenko (1814-1861), national hero of Ukraine, presented the intellectual maturity of the Ukrainian language and culture through his work as a poet and artist. Imperial Russia, however, imposed strict limits on attempts to elevate Ukrainian culture, even banning the use and study of the Ukrainian language.

When World War I and the Russian revolution shattered the Habsburg and Russian empires, Ukrainians declared independent statehood. In 1917 the Central Rada proclaimed Ukrainian autonomy and in 1918, following the Bolshevik seizure of power in Petrograd, the Ukrainian National Republic declared independence under President Mykhaylo Hrushevsky. After three years of conflict and civil war, however, the western part of Ukrainian territory was incorporated into Poland, while the larger, central and eastern regions were incorporated into the Soviet Union in 1922 as the Ukrainian Soviet Socialist Republic.

The Ukrainian national idea persevered during the twenties, but with Stalin's rise to power and the campaign for collectivization, the Soviet leadership imposed a campaign of terror that ravaged the intellectual class. Stalin also created an artificial famine (called the Holodomor in Ukrainian) as part of his forced collectivization policies, which killed millions of previously independent peasants and others throughout the country. Estimates of deaths from the 1932-33 famine alone range from 3 million to 7 million.

When the Nazis invaded the Soviet Union in 1941, some Ukrainians, particularly in the west, welcomed what they saw as liberation from Communist rule, but this did not last as they quickly came to understand the nature of Nazi rule. Nazi brutality was directed principally against Ukraine's Jews (of whom an estimated 1 million were killed), but also against many other Ukrainians. Babyn Yar in Kiev was the site of one of the most horrific Nazi massacres of Ukrainian Jews, ethnic Ukrainians, and many others. Kiev and other parts of the country were heavily damaged.

After the Nazi and Soviet invasions of Poland in 1939, the western Ukrainian regions were incorporated into the Soviet Union. Armed resistance against Soviet authority continued as late as the 1950s. During periods of relative liberalization--as under Nikita Khrushchev from 1955 to 1964 and during the period of "perestroika" under Mikhail Gorbachev -- Ukrainian communists pursued nationalist objectives. The 1986 explosion at the Chornobyl (Chernobyl in Russian) nuclear power plant, located in the Ukrainian SSR, and the Soviet government's initial efforts to conceal the extent of the catastrophe from its own people and the world, was a watershed for many Ukrainians in exposing the severe problems of the Soviet system. Ukraine became an independent state on August 24, 1991, and was a co-founder of the Commonwealth of Independent States (CIS) following the dissolution of the Soviet Union, although it has not officially joined the organization.

GOVERNMENT AND POLITICAL CONDITIONSUkraine has a presidential/parliamentary system of government with separate executive, judicial, and legislative branches. The president nominates the prime minister, who must be confirmed by the parliament. The 450-member unicameral parliament (Supreme Rada) initiates legislation, ratifies international agreements, and approves the budget. Its members are elected to four-year terms. Following free elections held on December 1, 1991, Leonid M. Kravchuk, former chairman of the Ukrainian Rada, was elected president for a five-year term. At the same time, a referendum on independence was approved by more than 90% of the voters. Political groupings in Ukraine include former communists, socialists, agrarians, liberals, nationalists, and various centrist and independent forces.

Shortly after becoming independent, Ukraine named a parliamentary commission to prepare a new constitution, adopted a multi-party system, and adopted legislative guarantees of civil and political rights for national minorities. A new, democratic constitution was adopted on June 28, 1996, which mandates a pluralistic political system with protection of basic human rights and liberties.

Freedom of religion is guaranteed by law, although religious organizations are required to register with local authorities and with the central government. Minority rights are respected in accordance with a 1991 law guaranteeing ethnic minorities the right to schools and cultural facilities and the use of national languages in conducting personal business. According to the constitution, Ukrainian is the only official state language. In Crimea and some parts of eastern Ukraine -- areas with substantial ethnic Russian minorities -- local and regional governments permit Russian as a language for local official correspondence.

Freedom of speech and press are guaranteed by law and by the constitution, but authorities sometimes interfere with the news media through intimidation and other forms of pressure. In particular, the failure of the government to conduct a thorough, credible, and transparent investigation into the 2000 disappearance and murder of independent journalist Heorhiy Gongadze, in which government officials have been credibly implicated, has had a negative effect on Ukraine's international image.

Ethnic tensions in Crimea during 1992 prompted a number of pro-Russian political organizations to advocate secession of Crimea and annexation to Russia. (Crimea was ceded by the RSFSR to the Ukrainian SSR in 1954, in recognition of historic links and for economic convenience, to mark the 300th anniversary of Ukraine's union with Russia.) In July 1992, the Crimean and Ukrainian parliaments determined that Crimea would remain under Ukrainian jurisdiction while retaining significant cultural and economic autonomy.

Official trade unions have been grouped under the Federation of Trade Unions. A number of independent unions, which emerged during 1992, among them the Independent Union of Miners of Ukraine, have formed the Consultative Council of Free Trade Unions. While the right to strike is legally guaranteed, strikes based solely on political demands are prohibited.

In July 1994, Leonid Kuchma was elected as Ukraine's second president in free and fair elections. Kuchma was reelected in November 1999 to another five-year term, with 56 percent of the vote. International observers criticized aspects of the election, especially slanted media coverage; however, the outcome of the vote was not called into question. In March 2002, Ukraine held its most recent parliamentary elections, which were characterized by the Organization for Security and Cooperation in Europe (OSCE) as flawed, but an improvement over the 1998 elections. The pro-presidential For a United Ukraine bloc won the largest number of seats, followed by the reformist Our Ukraine bloc of former Prime Minister Viktor Yushchenko, and the Communist Party. There are 450 seats in parliament, with half chosen from party lists by proportional vote and half from individual constituencies.

The campaign leading to the October 31, 2004 presidential election was characterized by widespread violations of democratic norms, including government intimidation of the opposition and of independent media, abuse of state administrative resources, highly skewed media coverage, and numerous provocations. The two major candidates - Prime Minister Viktor Yanukovych and opposition leader (and former Prime Minister) Viktor Yushchenko - each garnered between 39 and 40 percent of the vote and proceeded to a winner-take-all second round. The November 21 runoff election was marred by credible reports of widespread and significant violations, including illegal expulsion of opposition representatives from election commissions, multiple voting by busloads of people, abuse of absentee ballots, and an abnormally high number of (easily manipulable) mobile ballot box votes. Tens of thousands of people took to the streets of Kiev and other cities to protest electoral fraud and express support for Yushchenko, and conducted ongoing peaceful demonstrations.

The OSCE International Election Observation Mission found that the election "did not meet a considerable number of OSCE commitments and Council of Europe and other European standards for democratic elections...Overall, State executive authorities and the Central Election Commission (CEC) displayed a lack of will to conduct a genuine democratic election process." Other independent observers were similarly critical. On November 24, the CEC declared PM Yanukovych the winner with 49.46 percent compared to 46.61 for Yushchenko. The U.S. and Europe refused to accept the result as legitimate due to the numerous, uninvestigated reports of fraud. European leaders traveled to Kiev to mediate a political solution between the parties. On November 27, Ukraine's Verkhovna Rada (Supreme Parliament) passed a resolution declaring that the election results as announced did not represent the will of the people. On December 1, the Rada passed a vote of "no confidence" in the government. On December 3, Ukraine's Supreme Court invalidated the CEC's announced results and mandated a repeat of the second round vote to take place on December 26. An agreement mediated by the European leaders resulted in new legislation being passed by the Rada and signed by the President December 8. The Electoral law was reformed to close loopholes that had permitted pervasive electoral fraud. The Constitution was amended, effective not earlier than September 2005, to transfer power, especially with respect to appointment of Ministers, from the President to the Cabinet. Yet another law was passed, in first reading, to devolve some powers of the central government to regional councils. In addition, Prime Minister Yanukovych requested and was granted a leave of absence, and Prosecutor General Hennadiy Vasilyev submitted his resignation.

The December 26 re-vote took place in an atmosphere of calm. While irregularities were noted, observers found no systemic or massive fraud. The OSCE Mission, in a preliminary statement, noted that "campaign conditions were markedly more equal, observers received fewer reports of pressure on voters, the election administration was more transparent and the media more balanced than in previous rounds...in our collective view Ukraine's elections have moved substantially closer to meeting OSCE and other European standards." Preliminary results, unofficially announced by the CEC with 99 percent of precincts reporting showed Yushchenko with a lead of approximately 52 to 44 percent. However, the CEC was not expected to be able to certify a winner until the week of January 3, and inauguration of the new President was not expected until mid-January.

Security forces are controlled by the president, although they are subject to investigation by a permanent parliamentary commission. Surveillance is permitted for reasons of national security.

After independence, Ukraine established its own military forces of about 780,000 from the troops and equipment inherited from the Soviet Union. Under defense reform legislation passed in 2004, Ukraine is strengthening civilian control of the military, professionalizing its non-commissioned officer (NCO) corps, modernizing force structure to improve interoperability with NATO, and reducing troop numbers, all with an eye toward NATO standards. Current force levels are approximately 350,000 (plus 90,000 civilian workers in the Ministry of Defense), with the goal of further reductions to around 200,000 by 2005. Ukraine's stated national policy is Euro-Atlantic integration, including with both NATO and the European Union, though explicit mention of aspiration to NATO membership was removed from official military doctrine in July 2004. Ukraine has a Distinctive Partnership with NATO, signed an agreement with NATO on using Ukraine's strategic airlift capabilities, and has been an active participant in Partnership for Peace exercises, in Balkans peacekeeping, and Coalition forces in Iraq. Ukrainian units have been serving in the U.S. sector in Kosovo, and in the Polish-led division in Iraq.

ECONOMYUkraine has many of the components of a major European economy -- rich farmlands, a well-developed industrial base, highly trained labor, and a good education system. After eight straight years of sharp economic decline from the early to late 1990s, the standard of living for most citizens declined more than 50%, leading to widespread poverty. Beginning in 2000 economic growth has averaged 5-6% per year reaching 9.4 percent in 2003. Personal incomes are rising. The macro economy is stable, with the hyperinflation of the early post-Soviet period having been tamed. Ukraine's currency, the hryvnia, was introduced in September 1996 and has remained stable until quite recently. While economic growth continues, Ukraine's long-term economic prospects depend on acceleration of market reforms. The economy remains burdened by excessive government regulation, corruption, and lack of law enforcement, and while small and medium enterprises have been largely privatized, much remains to be done to restructure and privatize key sectors such as energy and telecommunications.

Ukraine is rich in natural resources. It has a major ferrous metal industry, producing cast iron, steel, and steel pipe, and its chemical industry produces coke, mineral fertilizers, and sulfuric acid. Manufactured goods include airplanes, turbines, metallurgical equipment, diesel locomotives, and tractors. It also is a major producer of grain, sunflower seeds, and sugar and has a broad industrial base, including much of the former USSR's space and rocket industry. Although oil and natural gas reserves are small, it has important energy sources, such as coal, and large mineral deposits, and is one of the worlds leading energy transit countries, providing transportation of Russian and Caspian oil and gas across its territory.

Ukraine encourages foreign trade and investment. The foreign investment law allows Westerners to purchase businesses and property, to repatriate revenue and profits, and to receive compensation in the event that property were to be nationalized by a future government. However, complex laws and regulations, poor corporate governance, weak enforcement of contract law by courts and corruption stymie large-scale foreign direct investment in Ukraine. While there is a functioning stock market, the lack of protection for minority shareholder rights severely restricts portfolio investment activities. Total foreign direct investment in Ukraine is approximately $7.32 billion as of July 1, 2004, which, at $154 per capita, is still one of the lowest figures in the region.

While countries of the former Soviet Union remain important trading partners, especially Russia and Turkmenistan for energy imports, Ukraine's trade is becoming more diversified. Europe is now the destination of over one third of Ukraine's exports, while around one quarter of Ukraine's exports go to Russia and the CIS. Exports of machinery and machine tools are on the rise relative to steel, which constitutes over 30% of exports. Ukraine imports 90% of its oil and most of its natural gas. Russia ranks as Ukraine's principal supplier of oil and Russian firms now own and/or operate the majority of Ukraine's refining capacity. Natural gas imports come from Russia, which delivers natural gas as a barter payment for Ukraine's role in transporting Russian gas to Western Europe.

The Government of Ukraine signed a 12-month $605 million precautionary standby agreement with the International Monetary Fund (IMF) in March 2004. The IMF, however, failed to complete its review of the agreement in July-August, raising concerns about inflationary aspects of an increasing budget deficit at a time when revenues are growing (i.e. a pre-election spending surge), the accumulation of arrears of VAT refunds to exporters and ongoing structural problems, especially in the financial sector. Ukraine received just $75 million of the $250 million Programmatic Adjustment Loan, second tranche, in 2003. The World Bank may grant the remaining $175 million to the Government of Ukraine this year, subject to energy sector financial reforms. European Bank for Reconstruction and Development (EBRD) project outlays, which often are tied to nuclear safety, totaled $120 million in 2003 and $206 million in 2002.

In 1992, Ukraine became a member of the International Monetary Fund and the World Bank. It is a member of the EBRD but not a member of the World Trade Organization (WTO). Ukraine applied for membership in the WTO in 1995. Progress on its application has been slow, but picked up momentum in 2003 and early 2004. The government's stated goal is to accede by the end of 2005.

Environmental IssuesUkraine is interested in cooperating on regional environmental issues. Conservation of natural resources is a stated high priority, although implementation suffers from a lack of financial resources. Ukraine established its first nature preserve, Askanyia-Nova, in 1921 and has a program to breed endangered species.

Ukraine has significant environmental problems, especially those resulting from the Chornobyl nuclear power plant disaster in 1986 and from industrial pollution. In accordance with its previously announced plans, Ukraine permanently closed the Chornobyl Atomic Energy Station in December of 2000. Design work as well as structural improvements to the "sarcophagus" erected by the Soviet Union are largely complete and construction on the new shelter to be built around the sarcophagus is expected to be awarded by the end of 2004.

Ukraine also has established a Ministry of Environment and has introduced a pollution fee system, which levies taxes on air and water emissions and solid waste disposal. The resulting revenues are channeled to environmental protection activities, but enforcement of this pollution fee system is lax. Ukraine ratified the Kyoto Protocol in April 2004.

Construction of a shipping canal through a UN protected core biosphere reserve in the Danube Delta, which began in May 2004, is an environmental issue of international interest.

FOREIGN RELATIONSUkraine considers Euro-Atlantic integration its primary foreign policy objective, but in practice balances its relationship with Europe and the United States with strong ties to Russia, including pursuing the Single Economic Space project with Russia, Belarus, and Kazakhstan. The European Union's Partnership and Cooperation Agreement (PCA) with Ukraine went into force on March 1, 1998. After the 2004 round of EU expansion, the EU did not signal a willingness to consider Ukraine for an association agreement, as Ukraine had hoped for, but instead included it in a new "neighbor" policy, disappointing many Ukrainians. On January 31, 1992, Ukraine joined the then-Conference on Security and Cooperation in Europe (now the Organization for Security and Cooperation in Europe -- OSCE), and on March 10, 1992, it became a member of the North Atlantic Cooperation Council. Ukraine signed a Charter Agreement with NATO in 1997, sent troops to Kosovo in close cooperation with NATO countries, signed an agreement for NATO use of Ukrainian strategic airlift assets, and has declared interest in eventual membership. It is the most active member of the Partnership for Peace (PfP).

Ukraine maintains peaceful and constructive relations with all its neighbors, though there are some unresolved maritime issues along the Danube and in the Black Sea with Romania; it has especially close ties with Poland and Russia. Relations with Russia are complicated by energy dependence, payment arrears, and a dispute over bilateral boundaries in the Sea of Azov and the Kerch Strait. The 1998 ratification of the bilateral Treaty of Friendship and Cooperation and a series of agreements on the final division and disposition of the former Soviet Black Sea Fleet have helped to reduce tensions. Ukraine co-founded the Commonwealth of Independent States (CIS) on December 8, 1991, but in January 1993 it refused to endorse a draft charter strengthening political, economic, and defense ties among CIS members. Ukraine was a founding member of GUUAM (Georgia-Ukraine-Uzbekistan-Azerbaijan-Moldova).

In 1999-2001, Ukraine served as a non-permanent member of the UN Security Council. Historically, Soviet Ukraine joined the United Nations in 1945 as one of the original members following a Western compromise with the Soviet Union, which had asked for seats for all 15 of its union republics. Ukraine has consistently supported peaceful, negotiated settlements to disputes. It has participated in the five-sided talks on the conflict in Moldova and promoted a peaceful resolution to conflict in the post-Soviet state of Georgia. Ukraine has also made a substantial contribution to UN peacekeeping operations since 1992.

U.S.-UKRAINIAN RELATIONSThe dissolution of the Soviet Union in December 1991 brought an end to the Cold War and created an opportunity to build bilateral relations with the New Independent States (NIS) as they began a political and economic transformation. On December 25, 1991, the United States officially recognized the independence of Ukraine. It upgraded its consulate in the capital, Kiev, to embassy status on January 21, 1992. The U.S. ambassador to Ukraine is John E. Herbst, the fifth U.S. ambassador since Ukrainian independence.

The United States attaches great importance to the success of Ukraine's transition to a democratic state with a flourishing market economy. Following a period of economic decline characterized by high inflation and a continued reliance on state controls, the Ukrainian government began taking steps in the fall of 1999 to reinvigorate economic reform that had been stalled for years due to a lack of a reform majority in the Ukrainian parliament. The Ukrainian government's stated determination to implement comprehensive economic reform is a welcome development, and the U.S. is committed to strengthening its support for Ukraine as it continues on this difficult path. Bilateral relations suffered a setback in September 2002 when the U.S. Government announced it had authenticated a recording of President Kuchma's July 2000 decision to transfer a Kolchuga early warning system to Iraq. The Government of Ukraine denied that the transfer had occurred. U.S. policy remains centered on realizing and strengthening a democratic, prosperous, and secure Ukraine more closely integrated into European and Euro-Atlantic structures.

U.S. Assistance to UkraineA cornerstone for the continuing U.S. partnership with Ukraine and the other NIS has been the Freedom for Russia and Emerging Eurasian Democracies and Open Markets (FREEDOM) Support Act (FSA), enacted in October 1992. Ukraine has been a primary recipient of FSA assistance. Total U.S. assistance since independence has been more than $3 billion. U.S. assistance to Ukraine is targeted to promote political and economic reform and to address urgent humanitarian needs. The U.S. has consistently encouraged Ukraine's transition to a democratic society with a prosperous market-based economy. For more detailed information on these programs, please see the "Annual Report to Congress on U.S. Government Assistance to and Cooperative Activities with Eurasia," which is available on the State Department's website at the following address: http://www.state.gov/p/eur/ace/. Information is also available on USAID's website at the address: http://www.usaid.gov.

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